Litt Threatens Third Proxy Fight at Mall Operator Taubman

Activist investor Jonathan Litt is threatening a proxy fight next year at Taubman Centers Inc. if the U.S. mall owner doesn’t take steps to improve its performance, including exiting Asia or divesting its top-performing properties.

Litt said in a letter to shareholders Tuesday that he planned to nominate directors at the 2020 meeting unless the company makes “meaningful progress.”

“Their best defense against a proxy contest in 2020 is to drive material outperformance by maximizing value for all shareholders,” Litt said in the letter, which was reviewed by Bloomberg.

The letter Tuesday is the latest salvo in Litt’s ongoing battle with the real estate company where he has been pushing for changes since 2016. He ran proxy fights at the company in 2017 and 2018.

Shares in Taubman Centers have fallen about 25 percent over the past year as investors flee the retail sector amid competition from online sellers. Shares rose 1% to $42.43 at 9:43 a.m. in New York Tuesday, giving the company a market value of about $2.6 billion.

Litt said he didn’t stand for re-election at the company’s annual meeting on May 30, in part, because the company didn’t intend to re-nominate him. He also noted that at next year’s meeting, all the directors in the company, including Chairman and Chief Executive Officer Robert “Bobby” Taubman, will stand for re-election now that the board was fully destaggered following the annual meeting this year.

He said Bobby Taubman “bears most of the responsibility for Taubman’s terrible track record.”

Representatives for Taubman couldn’t immediately be reached for comment.

Previous Fights

After losing a proxy fight at the company in 2017, Litt won a seat in 2018 on the board of the Bloomfield Hills, Michigan-based company. His Land & Buildings Investment Management currently holds a 1.8 percent stake, according to data compiled by Bloomberg.

“As I experienced first hand, one independent shareholder voice in the boardroom was simply not enough to implement the changes necessary to drive shareholder value,” Litt added.

Litt said in the letter he realized after serving on the board that the company’s 11 “Jewel Box” assets — which include top performing properties such the Mall at Short Hills in New Jersey and the Mall at Millenia in Orlando, Florida — were worth much more than he originally thought. He called for the portfolio to be sold or spun off and could fetch twice what Taubman Centers’s shares currently trade at.

The remaining assets in the portfolio would have sizable cash flow and have substantial value as a standalone company, he added.

Litt also said he believed the company should fully exit Asia where it owns malls such as CityOn.Xi’an in Northwest China. He said this move would be 10% accretive to annual earnings and allow it to materially reduce debt and eliminate future capital commitments. Blackstone Group LP’s February purchase of a 50% stake in three of Taubman’s Asian malls for $480 million confirms both valuation and investor interest in the assets, Litt said.

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